Brooklyn: 718.531.9700 | Manhattan: 212.696.4LAW
Toll-free: 855.HELD.HINES | Email:

Work Comp Central: Marc Held Quoted Regarding Uber Class-Action Settlement

Thursday, January 11, 2018

Uber Agrees to Settle Class Action, Denies Taking Comp Premiums From Drivers

By J. Todd Foster

Uber agreed to pay more than 2,000 New York drivers $3 million to settle a class-action lawsuit that alleges the ride-share company illegally took a 2.5% workers’ compensation premium surcharge from drivers instead of passengers.

Under the preliminary settlement, agreed to Monday but not yet signed by U.S. District Court Judge Nicholas G. Garaufis in Brooklyn, $1 million of the settlement would go to the plaintiffs’ attorneys, and $29,055 would go for attorneys’ costs.

The rest would be split among 2,421 drivers, unless they object in writing before a final fairness hearing that is not yet scheduled.

Uber Communications Director Alix Anfang said in an email, “We don’t have a comment on this.”

But the San Francisco-based ride-hailing company, which claims on its website to have 40 million riders and 2 million drivers in 77 countries, denies any wrongdoing.

“Defendants have defended, and vigorously contest, each and every claim in the action, and they deny all material allegations of the action, as to which numerous meritorious defenses exist,” the proposed settlement states.

“Defendants, without admitting any wrongdoing or liability, nevertheless have agreed to enter into this agreement to avoid further expense, inconvenience, and the distraction of burdensome and protracted litigation, and to be completely free of any further controversy with respect to the claims settled by this agreement,” it continued.

The complaint claimed Uber does not remit sales tax and workers’ compensation fees to drivers, and that it pockets driver gratuities and falsely advertises that they can “drive and make $5,000 guaranteed” in their first month.

The plaintiffs allege there is no such guarantee.

Some parts of the original lawsuit, filed by plaintiffs Jose Ortega and Joce Martinez on Dec. 29, 2015, have been dismissed.

Allegations of false advertising, unlawfully retaining gratuities, failure to provide accurate wage statements, failure to pay overtime and taking unlawful deductions, including workers’ compensation surcharges, were not dismissed.

New York lawmakers last spring passed a provision in their annual budget to authorize ride-hailing companies such as Uber and Lyft to operate outside of New York City.

The state Workers’ Compensation Board on Aug. 30 adopted a new rule that placed “transportation network company drivers,” basically all for-hire drivers, under the New York Black Car Operators’ Injury Compensation Fund, known as the Black Car Fund.

The rule allows drivers to petition the Black Car Fund for benefits if they are injured while driving for a ride-hailing company or engaging in an activity “reasonably related to” driving for the company.

“The 2.5% surcharge is one of two charges (the other being sales tax) that should have been borne by the passengers,” plaintiffs’ attorney Mark Held of Held & Hines in New York City said in a telephone interview Wednesday.

Of the allegation that Uber has been taking the surcharges from drivers instead of passengers, Held said, “We have proof that this has always been done.”

Held said that more than 100,000 New Yorkers are for-hire drivers and that the settlement affects only about 2% of them. The others opted out of the class action and can individually pursue arbitration, he said.

He expects the judge to sign off on the settlement agreement with Uber within two weeks but noted that a case currently before the U.S. Supreme Court will be instructive.

The high court on Oct. 2 heard arguments in Epic Systems Corp. v. Lewis. The case focuses on whether arbitration clauses in the employment or independent contractor context result in enforceable waivers of a worker’s right to bring or participate in a class action.

If the nation’s highest court rules that class-action waivers are unconstitutional, eligible workers would be able to seek redress in the court system.

If the Supreme Court upholds class-action waivers, it would give employers a powerful tool to bar class actions over workplace issues and would affect 25 million employment contracts, The New York Times reported.

New York’s Black Car Fund is a nonprofit that was created in 1999 and began covering black car and luxury limousine drivers who work with the fund’s affiliated 300-member bases, which represent more than 70,000 for-hire drivers, said Jason Fromberg, the fund’s communications’ director.

Base members are for-hire services that conduct 90% or more of their business on a non-cash basis (through contracts, credit cards, etc.) and own less than 50% of their affiliated vehicles.

By law they are required to become a member base of the Black Car Fund in order to receive workers’ compensation coverage for affiliated drivers.

“It is extremely successful,” Fromberg said, and the fund audits member bases randomly to ensure the 2.5% surcharge comes from passenger fares and not drivers.

Fromberg would not answer whether any audits showed Uber had been found out of compliance.

Debbie Berkowitz, senior fellow at the National Employment Law Project, said NELP considers drivers for Uber and other rideshares to be employees and not independent contractors.

For-hire driving is one of society’s most dangerous occupations, said Berkowitz, who in 2016 authored a policy brief, titled “On-Demand Workers Should Be Covered by Workers’ Compensation.”

“Taxi drivers and chauffeurs are killed on the job at a rate five times higher than the average for all other workers. They are among the highest risk of all jobs for occupational fatalities from homicides and motor vehicle accidents,” Berkowitz concluded.

One-third of taxi driver deaths are from motor vehicle accidents, while slightly more than half are from homicides, she said in a telephone interview.

“Clearly on the face of the law, it would be completely illegal to take these surcharges out of drivers’ paychecks,” she said.

The 18,000-member New York Taxi Workers Alliance says app-based rideshare companies exploit drivers by paying them poverty wages.

The alliance’s executive director, Bhairavi Desai, could not be reached for comment Wednesday but a year ago told WorkCompCentral that Uber’s business model is predicated on part-timing a full-time profession.

“They came into town offering a brighter day, and what they’ve actually unleashed is a never-ending nightmare, a race to the bottom,” Desai said. “The governor wants to carve out workers’ compensation as his one employee benefit and give Uber a free ride on all other aspects of labor law. How much does that matter if you’re earning below minimum wage and there’s nothing you can do about it?”

Areas of practice

  • Board of Education Abuse/Neglect
  • Breach of Contract Cases
  • Broker Commission Disputes
  • Civil Rights
  • Class Actions
  • Closings
  • Condominium & Cooperative Representation
  • Construction Accidents
  • Corporate Formation
  • Defamation & Slander Cases
  • Defective/Hazardous Products
  • Dog Bites/Animal Attacks
  • Drug Litigation
  • Employment Law
  • Ice/Snow Cases
  • Insurance Company Bad Faith Claims
  • Knockdown Bicycle Cases
  • Landlord & Tenant
  • Liquor / Tobacco / Lotto Licensing
  • Medical Malpractice
  • Membership / Shareholder Agreements
  • Motor Vehicle Accdients
  • Nursing Home Abuse/Neglect
  • Pedestrian Knockdown Cases
  • Personal Injury
  • Premise Liability
  • Prisoner’s Rights
  • Real Estate Broker Commission Disputes
  • Real Estate Closings
  • Real Estate Litigation
  • Refinances
  • Sale of Business
  • Slip & Fall Accidents
  • Trademarks
  • Wrongful Death